Guide to Good Governance THIRD EDITION

Transcription

1 Guide to Good Governance THIRD EDITION

2 Table of Contents Introduction to the Guide About the Authors I II Chapter 1: Framework for Good Governance 1 Objective: Good Governance of Hospital Corporations The Not-for-Profit Corporations Act 1 2 A Framework for Good Governance Condition #1 The Board s Role Condition #2 Board Quality Condition #3 Board Structure and Processes Boards are Responsible for their Own Governance 4 Chapter 2: Hospital Accountability and Stakeholder Relations 5 Understanding Hospital Accountability 5 Achieving Transparency 8 Engaging Stakeholders Legislative Requirements Effective Engagement Hospital Accountability and Relationships Hospitals and their Members Denominational Hospitals Hospitals and the Community Served Relationship with the LHIN Relationship with the Ministry Hospital Funding Relationships Hospitals and Donors Hospitals and their Foundations Hospitals and their Volunteers Hospitals and Other Health Care Providers

3 TABLE OF CONTENTS Chapter 3: Governance Models 28 Board Accountability and Authority is Broad 28 Constraints to the Board s Authority 28 Board Chooses its Governance Model 29 Governance Model Changes to Fit Organization 29 Trend Toward a Form of Policy Governance 30 The Line between Board s Role and Management s Role 31 Delegation Challenges 31 Generative Governance Mode 32 Approaches to Implementing Generative Governance 33 Chapter 4: Role & Functions of a Board 39 Function 1: Approve Strategic Goals and Directions 39 Understanding this Function 39 Implementing this Function 42 Organizing the Board to Perform this Function 46 Function 2: Establish a Framework for Performance Oversight 48 Understanding this Function 48 Implementing this Function 49 Organizing the Board to Perform this Function 52 Function 3: Oversee Quality 52 Understanding this Function 52 Defining Quality Care 53 Implementing this Function 54 Organizing the Board to Perform this Function 56 Function 4: Oversee Financial Conditions and Resources 57 Understanding this Function 57 Implementing this Function 58 Organizing the Board to Perform this Function 60 Function 5: Oversee Enterprise Risk Management 61 Understanding this Function 61 Implementing this Function 62 Organizing the Board to Perform this Function 65 Function 6: Supervise Leadership 66 Understanding this Function 66 Implementing this Function Chief Executive Officer 66 Implementing this Function Chief of Staff 72 Organizing the Board to Perform this Function 75

4 TABLE OF CONTENTS Function 7: Oversee Stakeholder Relationships 76 Understanding this Function 76 Implementing this Function 77 Organizing the Board to Perform this Function 78 Function 8: Manage the Board s Own Governance 79 Understanding this Function 79 Implementing this Function 79 Organizing the Board to Perform this Function 80 Special Functions of Boards Real Estate or Development 80 Board s Role in Integration 81 Chapter 5: The Board s Role in the Credentialing Process 99 Overview of the Appointment Process 99 Hospital By-Laws 100 The Role of the Medical Advisory Committee 101 The Board s Role in the Credentialing Process 102 If a Hearing is Not Requested 102 If a Hearing is Requested 102 Principles of Natural Justice 103 Summary of the Board s Role in the Credentialing Process 103 Frequently Asked Questions 104 Chapter 6: Duties and Obligations of Individual Directors 107 Understanding the Duties of Directors 107 Fiduciary Duties 107 Standard of Care 107 Rules of Fiduciary Conduct 108 Business Judgment Rule 110 Reliance on Others 111 Director Dissent 111 Understanding Director Liability 111 The Principle of Limited Liability and the Importance of Governance 111 Duties of Ex Officio and Non-Voting Directors 113 Duties of Ex Officio Directors 113 Duties of Non-Voting Directors 113 Frequently Asked Questions 114

5 TABLE OF CONTENTS Chapter 7: Board Composition, Education and Evaluation 135 Board Composition and Recruitment 135 Board Size 135 Board Quality and Composition 136 Legal Requirements 136 Other Board Composition Elements 138 Term 139 Recruitment, Nomination and Election 140 Board Orientation and Education 142 Governance Principles for Board Orientation 143 Governance Principles for Committee Orientation 143 Governance Principles for Board Education 143 Board Evaluation 144 Governance Principles for Evaluation Processes 144 Governance Centre of Excellence Evaluation Tools 145 Guidelines for Implementing Effective Evaluations 146 Frequently Asked Questions 148 Chapter 8: Board Structure and Processes 178 Board Leadership 178 Legal Requirements 178 Governance Principles 178 Board Chair 179 Board Committees 181 Legal Requirements 181 Governance Principles 182 Types of Committees 184 Board Meetings 184 Legal Requirements 184 Governance Principles 185 Member Meetings 190 Governance Principles 191 Frequently Asked Questions 192

6 TABLE OF CONTENTS Chapter 9: Developing Good Governance 245 Creating a Culture for Good Governance 245 Adopting Twelve Best Practices for Governance 246 Assessing Governance Regularly to Promote Development 248 Governance Review Process 248 Turning Troubled Boards Around 249 Signs of Governance Problems 249 Keys to Turnarounds 250 Remedies for Typical Troubles 251 Chapter 10: The Not-for-Profit Corporations Act (Ontario) 261 Application of the Not-For-Profit Corporations Act (Ontario) 261 Conflicts with Other Legislation 262 Key Terms and General Provisions of the Not-For-Profit Corporations Act (Ontario) 262 Articles of Incorporation and Articles of Amendment 262 Special Resolution and Ordinary Resolution 262 Method of Holding Meetings and Voting 263 Waiver of Rights 263 Officers 263 Corporate Capacity 263 General Authority of the Board and Board Delegation 264 By-Laws 264 Impact of the Not-For-Profit Corporations Act (Ontario) on Boards and Individual Directors 265 Board Size 265 Changing Board Size 265 Qualifications of Directors 265 Election/Appointment of Directors 266 Term of Directors Election 266 Consent 266 Director Voting 266 Removal of Directors 267 Provisions for Directors Meetings 267 Directors Duties and Liabilities 267 Conflict of Interest 268 Insurance and Indemnification 269

7 TABLE OF CONTENTS Impact of the Not-For-Profit Corporations Act (Ontario) on Members Membership and Voting Conditions Members Meetings Notice Quorum Members Rights Other Provisions Schedule A: Not-For-Profit Corporations Act (Ontario) Non-Delegable Board Powers 289 Schedule B: Matters Requiring Special Resolution Under the Corporations Act (Ontario) 289 Schedule C: Matters Requiring Member Approval by Special Resolution Under the Not-For-Profit Corporations Act (Ontario) 289 Appendix I: List of Forms 291 Appendix II: Resources and References 293 Appendix III: Glossary of Governance Terms 299 Appendix IV: Terms and Acronyms 302

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